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[Greg K]

Originally Posted by Remathilis

I mean, who really wants to play a game set in a fantastical world of vampires and ogres and druids only to be made a meal from a real-world animal?

Myself and practically everybody I have played with.

Who wants mundane real-world steel swords in a world where your mage buddy gets a wand of infused magical essence allowing him to shoot lightning from it?

If it can be enchanted or I can find an enchanted sword, I do. And by enchanted, I don't mean casting fireballs, death rays, fire auras or frost auras.

Besides, if the world was as infused with magic as the core rules seem to assume (with its large catalog of magical items, mythological beasts, and spells-a-plenty) why would it be a world where dudes in mundane chainmail die at the claws of normal bears?

Not everyone plays in the default setting or assumes the default setting is full of a large catolog of magical items and mythological beasts. For many of us, those are options to placed as we see fit.

Still, when one looks in the monster manual for "scorpions" and finds scorpions that deal lightning damage from their tail instead of large, poisonous "real" scorpions, something feels odd...

Honestly, scorpions shooting lightning out of their tails makes me groan. Then again, I despised most of WOTC's new monsters created for 3e and the same is already true for 4e.
I'll take the giant poisonous scorpions everyday of the week and twice on Sundays.

So has D&D drifted too far from mundane into fantastical?

Imo, yes.

Is it a bad thing?

Again, imo, yes. The same for my friends based on what they have said.

Can a balance between truly magical and fantastical elements (warlocks, demons, potions of fire-breath) be struck with historical or mundane elements (grizzly bears, fighters, bec-de-corbins?) without one or the other suffering?

Yes. For example, choose and place your magical and fantastical elements with care. Maybe, aberrations , most magical beasts, etc. are unique creatures. Place most of them ahead of time in particular areas with legends surrounding them (e.g, think the Medusa, the kraken, and the Hydra from Greek Myth). Or maybe, they are something that nobody has seen until the characters encounter the wizard that created them.

Similarly, place thought into the non-human races of your setting. You don't have to allow everything. Nor, do you have to allow every possible PC race because WOTC printed it somewhere.